Non-commercial losses: other assets test

If you have a net loss from a business activity you carry on as an individual, either as a sole trader or in a partnership, the non-commercial loss rules will apply. These rules determine whether you can use your business loss to offset income from other sources.

Further Information

For information on non-commercial losses generally, refer to Guide to non-commercial losses.

End of further information

Before you apply the other assets test

For the 2009-10 and later income years, you first need to meet the non-commercial losses income requirement before you can use the other assets test.

You meet the income requirement if the total of the following amounts is less than $250,000:

  • taxable income (ignoring any business losses)
  • total reportable fringe benefits
  • reportable superannuation contributions
  • total net investment losses.
Further Information

For more information about the income requirement, see: Non-commercial losses -income requirement.

End of further information

If you meet the income requirement, you can use the other assets test.

Other assets test

You will pass the other assets test if the value of the 'other assets' you use in your business activity on a continuing basis is at least $100,000.

You can count the value of four types of asset. They are valued in different ways.

When assessing the value of these assets for the test, you must use the same valuation method that you use for income tax purposes. (This does not apply if you are valuing leased assets.)

Asset type

Valued according to

Depreciable assets

the written-down value of the asset.

Trading stock

the value of each item of trading stock on hand at the end of the income year, assessed by:

  • cost
  • market selling value, or
  • replacement price.

Leased assets

the amount of the future lease payments you are irrevocably committed to (minus any interest component to the payments).

Trademarks, patents, copyrights and similar rights

the reduced cost base of the asset.

Assets excluded from the test

For the purposes of passing this test, exclude the value of:

  • real property assets you took into account for the real property test
  • interests in real property that you took into account for the real property test
  • cars, motorcycles and similar vehicles.

All-terrain vehicles (ATVs), so-called ag bikes and bull catchers are considered to be similar vehicles to cars and motorcycles and are therefore excluded.

Assets under construction would not normally be available for continual use in a business and would therefore also be excluded.

Use on a continuing basis

What constitutes use on a continuing basis will depend on your business circumstances.

However, you cannot include the value of an asset used:

  • on a short-term basis
  • for a one-off task
  • through an agreement for intermittent use on an hourly, daily, weekly, monthly or other short-term basis.

When to value assets

You should normally value your assets at the end of the income year.

However, if you ceased your business activity during the year, you should value the asset at the time the activity ceased or, if you sold or disposed of the asset before that time, you should value the asset at the time of disposal.

More information

Further Information

Guide to non-commercial losses

End of further information
    Last modified: 26 Jul 2011QC 16244